How BMW Made Sure It Never Heard from One NPE Again

Receiving a patent infringement claim from a non-practicing entity (NPE) can be handled in a variety of ways. Businesses can choose to pay for a license, or they can simply fight the NPE, both in federal courts and by filing petitions at the Patent Trial and Appeal Board (PTAB).

In rare cases, businesses can secure covenants asking NPEs not to sue and agreeing not to file any more suits. Finnegan was able to secure such an agreement from NPE Stragent for its client BMW recently.

Finnegan partner Lionel Lavenue told Managing Intellectual Property that, “After the last two rounds of litigation, Stragent continued to return, again and again, to the USPTO to obtain additional patents to assert against BMW and others.”

He noted that the automotive company had filed invalidity counterclaims and inter partes review petitions against Stragent. Additionally, Lionel said that there was also a risk of the NPE having to pay BMW’s attorney fees based on its litigation conduct.

“As a result, BMW had leverage to demand resolution in the form of a covenant not to sue ever again. Once the strength of BMW’s case and its negotiation stance was clear, Stragent had little choice but to acquiesce,” he said.

According to Lionel, negotiations with Stragent started quickly after a positive hearing for BMW this year in the District of Delaware.

“As a result of BMW’s litigation strategy and strong positions, Stragent had to concede that it could not survive summary judgment,” he said.

Lionel adds that BMW assured that the covenant wouldn’t be confidential very early in the negotiation process.

“BMW wanted to underscore that it does not take kindly to demands to license technology that it is not using, and thus will challenge erroneous assertions of patent rights,” he said.

“Once BMW made clear that publicity was a non-negotiable condition of the agreement, Stragent acceded.”

This was a wonderful outcome according to Lionel, who also said that the firm would explore executing similar agreements for other clients. He adds that the firm was fortunate to have BMW’s support for the plan, as it was the “only and best available option.”

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